Gauging the Impact of Medical Loss Ratio Rebates

One of the early regulations implemented under the 2010 health care overhaul law is a requirement that insurance companies give rebates to consumers for premium charges in excess of a minimum medical loss ratio (MLR). The requirement prompted $1.1 billion in rebates in 2011 and $520 million in 2012. The Government Accountability Office has released a survey of eight insurers inquiring on how the MLR requirement has impacted business practices. The GAO reported:

All eight insurers reported that they increased their premium rates since 2011 and that they based these decisions on a variety of factors, such as trends in medical care claims, competition with other insurers, and other requirements. Three of the eight insurers stated that the MLR requirements were one among several factors that influenced their decisions about premium rates. Four of the eight insurers stated they had recently made changes to the ir payments to agents and brokers, and one reported the MLR requirements were a primary driver behind its business decision. All eight insurers GAO interviewed stated that the MLR requirements did not affect their decisions to stop offering health plans in certain markets and have had no effect or a very limited effect on their spending on quality improvement activities.